Social services' compensation: Doing good, doing well

The president of the YMCA of Metropolitan Minneapolis was paid $336,000 in 2010 salary and benefits.

The Greater Twin Cities United Way president received $292,000.

The president of the Minneapolis Community Action Agency earned $236,000 in salaries and benefits -- more than $80,000 above his St. Paul counterpart.

The figures are the result of an analysis of 2010 data from Minnesota's largest nonprofits by the Star Tribune. They shed light on the range in executive compensation among the state's biggest social service agencies.

While not as lucrative as those at health care organizations, the pay and benefits at large social service groups are under new scrutiny as Congress and states seek to stretch budgets.

How much is too much?

It's a tricky one to answer, say charity monitors.

"On one hand, donors are intuitively right when they see what appears to be an excessive salary for a public charity," said Ken Berger, president of Charity Navigator, the nation's largest independent charity evaluator.

"But in many cases they can also be wrong. Many organizations are very large, complex and can't be run for free."

The data show that no Minnesota social service leader is earning $1 million, or even $500,000.

The biggest salary/benefit package went to the now-retired president of the Amherst H. Wilder Foundation, Tom Kingston. He had a $397,000 benefit package for running the $34 million operation.

A Wilder spokesman noted that Kingston's base salary was $280,000. The total cost was inflated by contributions to his pension.

Mark Peterson, retired CEO of Lutheran Social Service, whose $84 million budget makes it the region's largest social service provider, came in second with annual compensation of nearly $364,000.

The YMCA of Metropolitan Minneapolis ($64 million in revenue) was third at $336,000 for president Harold Mezile.

All three agencies said their executives are paid competitively, based on performance, the scope of their work and comparable positions.

"We grew 40 percent in just six years, and are helping more people than ever," said Jim Vos, chairman of the board of directors at Lutheran Social Service. "Leaders like that get rewarded."

Some big-budget nonprofits offer surprisingly small rewards. The Mankato Rehabilitation Center Inc. (MRCI) -- the state's eighth-biggest social service nonprofit at $49 million in revenue -- paid a benefit package of $101,000. Likewise, the Salvation Army's Northern Division, the fifth-biggest nonprofit with $54 million in revenue, paid just $102,000.

Brian Benshoof, MRCI's executive director, chuckled when he learned his agency was one of the tightest in the top 10. Benshoof, who has been at MRCI nearly 30 years, said the nonprofit made it a priority to keep administrative expenses low, roughly 5 percent, so it could spend the most dollars on clients and remain competitive for government contracts.

The Salvation Army figure doesn't reflect some unusual features of its benefit package. For example, divisional commander Dan Sjogren can live in a rent-free house and drive a loan-free car as long as he's stationed here, said spokeswoman Annette Bauer. But his $102,000 compensation is less than it appears, since it covers the wages of his wife, Rebecca, who works full time for the nonprofit.

"This is a ministry and our leaders are paid as pastors," said Bauer.

It makes sense that Minnesota's biggest nonprofits generally pay the top salaries, since compensation is tied closely to budgets, said Judy Alnes, executive director of MAP for Nonprofits, a St. Paul-based nonprofit management consulting firm.

Other factors include CEO experience, performance, fundraising skills and agency location (urban vs. rural), she said. The board of directors also can play a big role, charity monitors say.

A 2010 survey by the Minnesota Council of Nonprofits showed that the average salary -- not including benefit package -- for a nonprofit president was $155,000 for agencies with more than $5 million in revenue.

"I think people who take these jobs don't expect to get rich, but they hope to make an appropriate living," said Jon Pratt, council executive director.

Fair comparisons

Of the Star Tribune's 34 largest social service groups (See Business section, page D11) six are community action agencies. They are among 28 agencies statewide that act as conduits for government money for weatherization, fuel assistance, Head Start programs and other work.

Compensation varies widely, even after factoring for budgets.

Bill Davis, who oversees Community Action of Minneapolis, received $236,000. That was 1.4 percent of the agency's expenses in fiscal 2010, and the highest percentage among the 34 biggest nonprofits. The median was 0.6 percent.

By comparison, the Community Action Partnership of Ramsey and Washington Counties, paid $153,000 to executive director Clarence Hightower. He oversees a $28 million budget.

The Anoka County Community Action Program had revenue similar to Minneapolis', $15 million, but paid executive director Patrick McFarland $112,000.

Davis said his salary and benefits are not compared to Minnesota agencies, but to others in large cities nationwide. He said the pay reflects his 20-plus years at the organization, education, national profile, and the fact that Minneapolis has the state's highest poverty concentration.

Minnesotans are skeptical about wages at social service groups. A 2007 survey by the Charities Review Council of Minnesota showed that nearly half believed nonprofit workers should be paid less than their for-profit counterparts.

"People are supporting charities with their hard-earned dollars, so they want their money used for mission -- not for salary," said Rich Cowles, the council's executive director.

But big salaries are rare in Minnesota and nationwide, said Chuck McLean, vice president of research at Guidestar, one of the largest websites about nonprofits.

"We key in information from several hundred thousand 990 [tax] forms every year. There aren't a lot of people making a half-million bucks, much less a million bucks," McLean said.

Nonprofit CEO compensation is likely to get more scrutiny in the years ahead, experts predict.

"During tough economic times, people want to know their money is doing the most good," Cowles said.